Singapore Airlines Scoots into the Low-Cost Long-Haul Category
Scoot is a new subsidiary airline of the Singapore Airlines Group (SIA) launched in November 2011. It is a low-cost, medium to long-haul carrier that is independently operated and based out of Changi Airport in Singapore. The low-cost carrier model is thriving as income levels continue to rise throughout the Asia-Pacific region, where more people are travelling by air for the first time. However, this phenomenon has led the airline industry to experience commoditisation and greater price-based competition. Full-service Singapore Airlines — an established premium brand with a long history — has a business model inappropriate for this kind of environment. Scoot’s raison d’être is to take advantage of opportunities in the rapidly growing budget-travel segment.
Campbell Wilson, a 17-year veteran of Singapore Airlines, is seconded as CEO to startup Scoot. In the year following the launch, criticisms of the new airline begin to appear. In October 2012, an editorial in a prominent publication claims that Scoot will contaminate the Singapore Airlines brand and cannabalise sales. How should Wilson address these claims?
Through this case discussion, students will be able to distinguish the different brand positions between the new airline, Scoot, and its parent brand, Singapore Airlines, and understand what makes a brand strong, as well as how a strong brand is built. They will be able to apply the concepts of competitive market signalling and entry deterrence to the Singapore Airlines Group’s strategy, and articulate whether these concepts apply to the group’s strategy, and why.
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